IBM (NYSE: IBM) topped a list of companies praised for their climate change strategy and practices, but consumer and technology companies still have to do more in confronting these challenges, according the investor group Ceres, which announced the list in a new report.
The report, authored by RiskMetrics Group, found that select companies in various consumer and technology sectors are responding to the risks and opportunities presented by climate change, primarily by setting GHG emissions reduction targets, boosting energy efficiency efforts, expanding renewable energy purchases and integrating climate factors into product design.
But the report found that many other companies are still largely ignoring climate change, especially at the board and CEO level. For example, only 11 of the 63 companies have their boards receive climate-specific updates from management, only seven of the CEOs among these firms have taken leadership roles on climate change initiatives and none of the companies have linked C-suite executive compensation directly to climate-related performance.
The mixed performance was evident in the report’s final scores. Using a 100-point scale, the three highest scoring companies were IBM, UK-based grocery retailer Tesco (TSCO.L) and Dell (Nasdaq: DELL), with 79, 78 and 77 points, respectively. More than half of the 63 companies scored under 50 points, with a median score of 38 points.
"Many companies, especially technology and pharmaceutical firms, are doing a better job of integrating climate change into their business strategies," said Mindy S. Lubber, president of Ceres, which published the report, Corporate Governance and Climate Change: Consumer and Technology Companies. "But the overall responses among these companies are very spotty, especially in the restaurant, real estate and travel & leisure sectors where climate change is barely on their radar. With or without a recession, climate change is a core business issue that all consumer and tech companies should be focused on."
The report uses a "Climate Change Governance Framework" to evaluate how 48 US companies and 15 non-US companies are addressing climate change through board of director oversight, management execution, public disclosure, GHG emissions accounting and strategic planning and performance.
The 11 industry sectors included in the report are: Apparel, Beverages, Big Box Retailers, Grocery & Drug Retailers, Personal & Household Goods, Pharmaceuticals, Real Estate, Restaurants, Semiconductors, Technology and Travel & Leisure.
Leading institutional investors requested the report to elevate their understanding of which consumer and technology companies have the best management systems in place to address climate risks before they become liabilities and which companies are pursuing strategic opportunities with their customers and suppliers. The investors are part of the Investor Network on Climate Risk (INCR), an alliance of 75 institutional investors coordinated by Ceres.
"There is a strong link between sound reporting and management of climate- and energy-related challenges, and the long-term financial viability of companies we invest in," added Anne Stausboll, interim chief investment officer at the California Public Employees Retirement System (CalPERS), the nation’s largest public pension fund with $181 billion in assets under management and an INCR member.
The report concludes that more action is needed to align company strategies with GHG reductions that scientists say are needed to avoid dangerous impacts from climate change.
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